FSA welcomes IOSCO information sharing move to fight illegal securities activity

Andrew Procter, FSA Director of Enforcement, said:

"As financial services markets become increasingly globalised, so the opportunities for cross-border crime and other misconduct proliferate. In the light of these trends, international co-operation amongst financial services regulators is growing increasingly important. Becoming a signatory to the IOSCO MoU ensures that the FSA can continue to play a key role in this area.

"We are also pleased to announce the appointment today of the FSA's Loretta Minghella to two important positions within IOSCO. First, Loretta has been appointed to the Chair of the IOSCO Technical Committees Standing Committee on Enforcement and Exchange of Information - it has responsibilities for considering and developing practical responses to the key enforcement issues of the day.

As Chair of the Standing Committee, Loretta also becomes co-chair of the Screening Group of the IOSCO MoU. This Group has an important part to play in determining whether applications from prospective signatories to the MoU are accepted and in making sure applications from countries wishing to become signatories are dealt with fairly and expeditiously. Whilst it is of benefit to all MOU signatories that regulators from as many jurisdictions as possible are able to participate, it is equally important that those jurisdictions whose applications are accepted are properly empowered to deliver the co-operation expected of them.

We are confident that Loretta's expertise and experience in international regulatory matters will enable her to take forward the challenging work of these important groups successfully."

The Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information was introduced today at the 2003 Annual IOSCO Conference in Seoul, South Korea. It provides for the exchange of essential information in investigating cross-border securities and derivatives law violations, including bank, brokerage, and client identification records. The MoU also enables regulators to use that information to enforce compliance with securities and derivatives laws and regulations, including through civil and criminal prosecutions.

The conference also adopted today the Methodology for Assessing Implementation of the IOSCO Objectives and Principles of Securities Regulation - a new instrument to assist its members in drafting more effective securities regulations.

Notes for editors

1. Loretta Minghella is Head of Law, Policy and International Co-operation of the FSAs Enforcement Division.

2. An IOSCO Press Release containing more details about the conclusions of the 2003 Annual Conference is attached. More information about IOSCO can be found on its Website www.iosco.org.

3. IOSCO, based in Madrid, Spain, is the primary forum for international cooperation among securities regulators and is recognized as the international standard-setter for the securities sector. IOSCO currently has 181 members from more than one hundred jurisdictions.

4. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection of consumers; and fighting financial crime.

5. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.

IOSCO PRESS RELEASE

IOSCO Strengthens International Cooperation to Fight Illegal Securities and Derivatives Activities

The International Organization of Securities Commissions (IOSCO) highlighted today at its 2003 Annual Conference in Seoul, South Korea, the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (IOSCO MOU), the first global information-sharing arrangement among securities regulators. The IOSCO MOU sets a new international benchmark for cooperation critical to combating violations of securities and derivatives laws. It expresses a commitment by IOSCO members to put in place efficient and effective arrangements for information-sharing to address illegal use of the securities and derivatives markets, including market abuse and fraud. Applicants to become signatories to the IOSCO MOU must undergo a rigorous screening process to verify their ability to co-operate as provided in the IOSCO MOU. A monitoring group, comprised of all MOU signatories, also has been constituted to monitor signatories compliance with the terms of the IOSCO MOU.

Although the arrangement was first agreed to last year, IOSCO is highlighting the IOSCO MOU today in recognition of the MoUs role over the past year in successfully encouraging securities regulators around the world to enhance their abilities to co-operate and share enforcement-related information with their counterparts in other countries.

Professor Fernando Teixeira Dos Santos, the Chairman of the IOSCO Executive Committee and President of Portugals Comisso do Mercado de Valores Mobilirios, noted that, The assistance IOSCO members offer each other through the MOU mechanism will prove valuable to investigations on the illegal use of securities and futures markets. Professor Teixeira Dos Santos also stated that several of the twenty-four (24) current signatories to the IOSCO MOU had to seek from their governments changes to their legal authority to share information with their foreign counterparts to meet the standards in the IOSCO MOU. Professor Teixeira Dos Santos continued, The MOU truly reflects an international consensus among securities and derivatives regulators that effective regulation of globalized capital markets requires a high degree of cooperation among the worlds regulators.

Although a number of securities authorities have set up their own bilateral agreements over the past decade to co-operate with each other on cross-border securities fraud investigations, the IOSCO MOU is the first agreement of its kind whereby a group of securities regulators have agreed to share information relating to enforcement investigations, on an equal basis, with all other signatories. Under the MOU procedures, those IOSCO members that are unable to meet the MOU requirements today cannot become signatories, but still may express their specific commitment to obtaining the necessary legal authority.

The IOSCO MOU provides for the exchange of essential information in investigating cross-border securities and derivatives law violations, including bank, brokerage, and client identification records. The MOU also enables regulators to use that information to enforce compliance with securities and derivatives laws and regulations, including through civil and criminal prosecutions.

A list of the IOSCO MOU signatories is attached.

IOSCO Adopts Instrument to Enhance Securities Regulation Worldwide

IOSCO also today announced adoption of a new instrument to assist its members in drafting more effective securities regulations. The IOSCO Methodology for Assessing Implementation of the IOSCO Objectives and Principles of Securities Regulation will assist jurisdictions in identifying areas where their securities regulations do not meet the international standards set out in the IOSCO Principles, in categorizing failures in implementation by degree of severity, in identifying areas for priority action, and in developing action plans to seek any necessary reforms.

Professor Fernando Teixeira Dos Santos, the Chairman of the IOSCO Executive Committee, noted: Promoting implementation of the IOSCO Principles is one of IOSCOs highest priorities. IOSCO members have resolved to promote high standards of regulation in order to maintain fair, efficient and financially sound securities markets, and to provide mutual assistance to protect the integrity of markets throughout the world through a rigorous application of those standards. Enhancing the quality of securities regulation facilitates the process of capital formation and promotes the protection of investors, thereby stimulating economic development and job creation. The new Methodology is an important tool by which expertise and know-how relating to the regulation of securities markets can be translated into improving overall opportunities for global investment.

IOSCO anticipates that its Assessment Methodology may be used in a variety of contexts, including in internal or external assessments by IOSCO members; by the International Monetary Fund and World Bank in a variety of capacities, including their Financial Sector Assessment Program; and as a tool to provide training and technical assistance to both developed and emerging markets.

IOSCO, based in Madrid, Spain, is the primary forum for international cooperation among securities regulators and is recognized as the international standard-setter for the securities sector. IOSCO currently has 181 members from more than one hundred jurisdictions.

Mr. Philippe Richard Secretary General Tel: (3491) 417 55 49 Fax: (3491) 555 93 68 e-mail: mail@oicv.iosco.org Internet Home Page: www.iosco.org

IOSCO MOU signatories:

ALBERTA Alberta Securities Commission

AUSTRALIA Australian Securities and Investments Commission

BRITISH COLUMBIA British Columbia Securities Commission

FRANCE Commission des oprations de bourse

GERMANY Bundesanstalt fr Finanzdienstleistungsaufsicht (BaFin)

GREECE Capital Market Commission

HONG KONG Securities and Futures Commission

HUNGARY Hungarian Financial Supervisory Authority

INDIA Securities and Exchange Board of India (SEBI)

ITALY Commissione Nazionale per le Societ e la Borsa

JERSEY Jersey Financial Services Commission

LITHUANIA Lithuanian Securities Commission

MEXICO Comisin Nacional Bancaria y de Valores

NEW ZEALAND New Zealand Securities Commission

ONTARIO Ontario Securities Commission

POLAND Polish Securities and Exchange Commission

PORTUGAL Comisso do Mercado de Valores Mobilirios

QUEBEC Commission des valeurs mobilires du Qubec

SPAIN Comisin Nacional del Mercado de Valores

SOUTH AFRICA Financial Services Board

TURKEY Capital Markets Board

UNITED KINGDOM Financial Services Authority

UNITED STATES OF AMERICA United States Securities and Exchange Commission

UNITED STATES OF AMERICA Commodity Futures Trading Commission (CFTC)